Correlation Between TITAN MACHINERY and ULTRA CLEAN

Can any of the company-specific risk be diversified away by investing in both TITAN MACHINERY and ULTRA CLEAN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TITAN MACHINERY and ULTRA CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TITAN MACHINERY and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on TITAN MACHINERY and ULTRA CLEAN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TITAN MACHINERY with a short position of ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and ULTRA CLEAN.

Diversification Opportunities for TITAN MACHINERY and ULTRA CLEAN

0.4

Correlation Coefficient

TITAN MACHINERY  ULTRA CLEAN

Very weak diversification

The 3 months correlation between TITAN and ULTRA is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS and TITAN MACHINERY is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TITAN MACHINERY are associated (or correlated) with ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of TITAN MACHINERY i.e., TITAN MACHINERY and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and ULTRA CLEAN

Assuming the 90 days trading horizon TITAN MACHINERY is expected to under-perform the ULTRA CLEAN. But the stock apears to be less risky and, when comparing its historical volatility, TITAN MACHINERY is 1.2 times less risky than ULTRA CLEAN. The stock trades about -0.05 of its potential returns per unit of risk. The ULTRA CLEAN HLDGS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,400  in ULTRA CLEAN HLDGS on September 21, 2024 and sell it today you would lose (40.00) from holding ULTRA CLEAN HLDGS or give up 1.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

TITAN MACHINERY  vs.  ULTRA CLEAN HLDGS

TITAN MACHINERY

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TITAN MACHINERY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ULTRA CLEAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TITAN MACHINERY and ULTRA CLEAN

The main advantage of trading using opposite TITAN MACHINERY and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TITAN MACHINERY position performs unexpectedly, ULTRA CLEAN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.

The idea behind TITAN MACHINERY and ULTRA CLEAN HLDGS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.